Amazon founder and Chief Executive Jeff Bezos in Santa Monica last year. (Al Seib / Los Angeles Times )
Amazon.com reported a 22% increase in revenue in the first quarter but a hefty decline in profit.
For the three months ended March 31, the e-commerce behemoth said profit fell 37% to $82 million, or 18 cents a share, from $130 million, or 28 cents, a year earlier.
Revenue totaled $16.07 billion, up 22% from $13.18 billion.
Despite the sharp decline in profit, the results came in well ahead of expectations. Analysts polled by FactSet were expecting earnings of 7 cents a share. Revenue, however, came up a tad short, with analysts expecting $16.14 billion.
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The profit decline is largely because of Amazon's heavy spending on acquisitions, new distribution centers, global expansion and digital media growth.
"The bar is low when it comes to profitability at Amazon, but the clock may finally be starting to tick for Amazon to produce profits," said BGC Partners analyst Colin Gillis in a note to investors. "The bull case that Amazon can become a gusher of profitability once its investments mature is going to be tested later this year in our opinion."
Gillis said he assumed that Amazon only makes three-tenths of a penny on every dollar of revenue.
The Seattle company reported earnings after the markets closed. During regular trading, Amazon's shares rose $5.92, or 2.2%, to $274.70. In after-hours trading, the shares were up 2% at 1:35 p.m. Pacific time.
Amazon has been busy recently, announcing new licensing agreements to expand its Prime Instant Video selection; debuting 14 original comedy and children's pilots; acquiring book-recommendations site Goodreads; and extending its AutoRip service to vinyl records.
For the current quarter, Amazon is projecting revenue of $14.5 billion to $16.2 billion, which would represent year-over-year growth of 13% to 26%.
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